Written by: Zaki al-Zayat

In recent year’s social media in all its aspects such as blogs, forums and online communities have gained unprecedented popularity, as they been embraced by millions of users worldwide and from various demographics. Likewise, numerous organizations utilize social media as means to relate and interact with their stakeholders on daily basis. More specifically, organizations that is innovative in their nature, are developing strategies and methods to harness insights form social media by encouraging contribution into their open innovation process. Hence, this paper will attempts to reveals the potentials of social media in open innovation and the relationship between them. However prior to examining this relationships, we will review social media concept along with the reasons that open innovation come to be so important for today’s organizations.

Social Media

Social media, is based on internet-applications that is created on the technological grounds of Web 2.0 , which allow consumer-generated content to be create and easily transmitted in many methods, such as text, image, video, and audio (Berthon, 2012). Accordingly, social media utilize Web 2.0 technology, in order to create highly interactive platforms that facilitate communicating, collaborating and sharing user-generated content (Kaplan and Haenlein, 2010; Kietzmann et al, 2011; King et al, 2014). Additionally, due to social media special communication medium characteristics it allowed the democratization of information and knowledge, in addition it transformed the users from content consumers, into content producers (Berthon, 2012). The interactive abilities of social media offer a conceptual parallel to the interactively generated nature underlying the ‘engagement’ concept with worldwide participant with almost immediate response times with low-cost and user-friendly interfaces (Hollebeek, 2014). Social media includes collaborative projects (e.g. Wikipedia); blogs (e.g. Tumblr); microblog (Twitter); social networking sites (e.g. Facebook, google +); content communities (e.g. YouTube); and virtual social worlds (e.g. Active Worlds) (Boyd and Ellison, 2008).

Open Innovation the lifeblood of modern organizations

Innovations is vital to any organization survival, as it assist in discovering what opportunities exist now, or are likely to emerge and anticipate future trends (Day and Shoemaker, 2005; Teece, 2010). As Innovation don’t only cover creating or enhancing product and service, but can also focus on enhancing existing business processes and models to be more efficient (Charitou and Markides, 2003; Teece, 2010). In other words, innovation have a massive impact on staying ahead of competition especially when markets, technologies and trends shift.

Growing complexity in innovation processes, rapid changes in customer-needs, globalization and the high failure rates of newly launched products have all encouraged organizations to forge new paths to innovate. Therefore, since the end of the 20th century, the recognized process of innovation is established that organizations hardly ever innovate solely internally. As most of the innovation are the result of collaborative interactions among suppliers, consumers, as well as other external actors. (Chesbrough, 2003). This collaboration known as “Open Innovation”, as its importance has been recognized for many years as it create higher values than similar “closed innovations” that is created merely on internal research and ideas generated within their boundaries (Chesbrough, 2003; von Hippel 2005). Hence, organizations that innovatein isolationare notcapable tocompete any longerincurrenthighlycompetitivemarketsthat is ruledbyproduct renewalandinnovationpressureas well as shorterproductlife cycles. As this new era has also amplified the need to consider not only how to address customer needs more astutely, but also how to capture value from providing new products and services by capturing insight from their users, through open innovation (Teece, 2010). As the perspective changes from “inside-out to outside-in” or as Richard Normann (2001) said the market as a sink is replaced by the customer as a source. Therefore, open innovation is an interactive process of discovery and utilization of a new innovative ideas with external actors, which is necessary to acclimate with the rapid transformation of the information society that organizations operate in, and adjust with rapid new market trends and changes in consumers’ preferences (Charitou and Markides, 2003; Chesbrough, 2003).

Open Innovation through Social

The new paradigm shift that is dominating open innovation process is seen as its capability to establish networks with key external actors, as the central actors in those networks are the consumers (Chesbrough, 2003; von Hippel, 2005). Consequently, special techniques and strategies has been established lately by organizations to engage the consumers into their open innovation process byset of active, creative and social collaboration process between both parties. Aiming to exploit the full potential of their open innovation investments and capabilities.

In practice, leading organizations attract many individuals through social media to involve consumers in the in the co-creation of value and the open innovation process (Bugshan, 2015). As through social media organizations acquire clarified, improved understanding of consumer needs and desires (Bugshan, 2015). As social media offer a good place for observation and a possibility to discover what consumers really think about a specific product and service, which will reduce risk and uncertainty (Chesbrough, 2003; von Hippel 2005). Moreover, one of the greatest challenges for open innovation is to identify upcoming consumer needs in the future (von Hippel 2005). Thus, accurate knowledge on consumer needs is vital, in addition to insight about previous expectations and experiences on how a product will be used or in what context (von Hippel, 2005). Here, social media can be an important tool and source of information, if an organization manages the execution, delivery and collection of relevant information’s (Bugshan, 2015).

Cachia et al. (2007) identified three areas in which social media is used for market foresight that can be summarized in the context of open innovation, namely: creativity, expertise, and collective intelligence.

Creativity:

Social media provide creativity by offering numerous collaborations through network of a mass consumers with extensive diverse knowledge (e.g. consumers, engineers, scientist, universities … etc.). Through this interaction with external stakeholders organizations are able to boosts internal creativity, knowledge and innovativeness, as this resourceful tap of knowledge can be explored and exploit at different stages of the open innovation process. For instance, According to von Hippl (2005) cooperating with lead-users has been described as an important source of open innovation for firms especially in fast-paced or turbulent markets. As further evidence from several studies in this field, demonstrate that organizations that actively pursue value from collective creativity, develop new interpretations and discoveries that thinking alone would not have generated (King et al., 2014).

Expertise

Expertise provided by social media refers to the capability of offering an enhanced tool and mechanism for collecting consumer insight and market foresight. The mass data from user-generated content presented on social networks permits for sophisticated environmental scanning through data mining. As Day and Shoemaker (2005) stated environmental scanning is essential for organizations in order to innovate and remain competitive along with anticipate emerging trends which help in the identification of changes in the market. As demonstrated from Walkers Crisps by Pesico case when they turned into social media users help (e.g. Facebook) for the development of new flavor for their chips. By understanding consumers’ preference and engage them inthe open innovation process by establishing active interaction and dialogue, organizations will be capable to developsuperior value propositions thatare morerelevant to theirtarget consumers (von Hippel 2005).

Collective intelligence.

Collective intelligence is the accessible knowledge synergies that arise from crowd cooperation, when the whole becomes greater than the sum of its parts (Fournier and Avery, 2011; Kietzmann et al, 2011). This reasoning is derivative from the conceptual assumption that access to a varied array of talents, competences, and experience through social media allows the creation of unique solutions in new and novel ways. Furthermore, through social media collective intelligence cognitive bias will be minimized by allowing consumers to concentrate on processes, problems, and solutions that occur naturally (Kietzmann et al, 2011). As many organizations solicit and capture consumer feedback and power from social media collective intelligence (Fournier and Avery, 2011).

There are a number of examples of successful incorporation of social media into open innovation process, from leading international organizations like Linux, Procter & Gamble, General Electric, Wikipedia, Samsung, Cisco, Dell, LEGO, Walmart and much more. As they all integrate their customers into open innovation management process, by providing them with tools and medium to interact (Figure 1 and Figure 3). As innovation start with simple idea, which get systematically assessed and evaluated within an innovation management process with the aim to introduce marketable products.

For instance in Procter & Gamble (P&G) case sited in Chesbrough (2003), illustrate how externally open innovation strategies get promoted, which in P&G named “connect and develop” (website on Figure 1). Which by this strategy they significantly add to the productivity and creativity of traditional, internally focused R&D, as well encouraging new participants through social media promotion (Figure 2). Even though P&G has thousands of scientists and researchers that are top of their class and are constantly evolving the industrial knowledge to enable new offerings. They realize that there is millions more of scientists and researchers that are working outside of P&G; so why try to invent everything internally? Additionally they also share their own ideas and knowledge that is generates in P&G labs, but were not utilized or commercialized within three years. So their unused discovered knowledge is shared with others, even with their competitor, through social media.

Figure 1 Connect and Develop website from P&G, call upon external ideas from engineers and scientists and same time offers its own ideas to others

Figure 2 a participant in open innovation project with P&G “Connect and Develop”, share his trophy on Facebook

WalmartLabs Facebook page from Walmart (figure 3) is another example of social medium use, to tap into ideas from consumers. The page also call upon external ideas and encourages others to comment on the Walmart own ideas and offers.

Figure 3, WalmartLabs Facebook page

Conclusion

The use of social media as consumer–organization relationship medium to connect, interact, and cooperate with consumers has dramatically increased in recent years. According to Naylor et al., (2012) by 2011 around 83% of fortune top 500 organizations were using social media to connect with consumers. As the rise of web 2.0 technologies along with rapid developments and diffusion of the internet have been the main driver key of this paradigm shift. Due to the rise of social media organizations are able to cooperate more effortlessly and at small budget with great numbers of consumers (von Hippel, 2005; Kaplan and Haenlein, 2010).

Social media is considered a powerful knowledge source in addition to its role as facilitator to draw insights from a creative, expert and diverse intelligence pool that can be applied to organizational open innovation (Chesbrough, 2003; Cachia et al., 2007). Knowing that countless number of organizations have adopted open innovation processes to complement internal R&D, due to its advantages (Charitou and Markides, 2003; Chesbrough, 2003). Involving consumers in the innovation process not only diminishes costs but also minimize the problematical matters related to adopting a new innovation (von Hippel, 2005). Hence, incorporating social media to organization open innovation process has become a core strategy in great variety of branches, thus this approach cannot be restricted to a specific industry sector.

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